EN BANC

[G.R. No. L-15509. March 31, 1962.]

SEBASTIAN SARMIENTO, ET AL. , petitioners-appellees, vs. HON.

ELEUTERIO CAPAPAS, as Commissioner of Customs, ET AL. ,
respondents-appellants. GREGORIO GAMULO, ET AL. , intervenors-
appellees.

Ferdinand E. Marcos for petitioners-appellees.

Solicitor General for respondent-appellants Eleuterio Capapas.
Manuel C. Chan for respondent-appellant Harry Stonehill.
Deogracias E. Lerma for respondent-appellant Ernesto T. Jimenez.
Conrado Rubio for intervenors-appellees.

SYLLABUS

1. DECLARATORY RELIEF; INSTITUTION OF ACTION AFTER BREACH OF

CONTRACT OF STATUTE; CASE AT BAR. — The institution of an action for declaratory
relief after a breach of contract or statute, is objectionable on various grounds, among
which is that it violates the rule on multiplicity of suits. In the case at bar, if the action
for declaratory relief were allowed, the judgment therein notwithstanding, another
action would still lie against the importer respondent for violation of the barter law. So,
instead of one case only before the courts in which all issues would be decided, two
cases would be allowed, one being the present action for declaratory relief and a
subsequent one for the con scation of the importations as a consequence of the
breach of the barter law.

DECISION

LABRADOR , J : p

Appeal from a decision of the Court of First Instance of Ilocos Norte, Hon. Del n
B. Flores, presiding, in Civil Case No. 2790 of that Court, declaring the nullity of Barter
Permit No. BT-1380 (SP) issued to the Philippine Tobacco Flue-Curing and Redrying
Corporation (hereinafter called PTFRC) and all the importations made thereunder, and
ordering the forfeiture to the Government of said importations.
The original action in this case was presented on May 28, 1958 and the petition
seeks the issuance of an injunction against the respondent Collector of Customs and
Commissioner of Customs to prohibit them from releasing the importations made
under the Barter Permit No. BT-1380 (SP) in the name of the Philippine Tobacco Flue-
Curing and Redrying Corporation, and to order the respondents Collector of Customs
and Commissioner of Customs to institute seizure and con scation proceedings of the
importations of tobacco under said Barter Permit No. BT-1380 (SP).

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 On June 9, 1958 the petitioners led a motion to be permitted to le a new
petition for declaratory relief, in substitution of the petition for prohibition with
preliminary injunction. The principal allegations of the amended petition are as follows:
That on May 1 to 6, 1958, shipments of 666 hogsheads of Virginia Type Leaf
Tobacco, worth $314,675.62 were imported by the Philippine Tobacco Flue-Curing and
Redrying Corporation under the Barter Permit No. BT-1380 (SP) issued on January 21,
1958;
That on May 8, 1958, the Collector of Internal Revenue issued an authority to
release the said imported goods, which authority was addressed to his co-respondents
Hon. Eleuterio Capapas, as Commissioner of Customs and/or Hon. Isidro Angangco as
incumbent Collector for the Port of Manila, declaring that said 666 hogsheads of
tobacco were imported under the Barter Permit No. BT-1380 (SP) dated January 21,
1958 by the No-Dollar Import Office;
That on May 13, 1958 the administrator of ACCFA addressed a communication
to the Commissioner of Customs, Manila, stating that he had no objection to the
release of the imported Virginia leaf tobacco or the release of said 666 hogsheads of
tobacco;
That the said shipments of 666 hogsheads of tobacco form part of several other
shipments of Virginia Type Leaf Tobacco, which are due to arrive at the Port of Manila
under the same Barter Permit No. BT- 1380 (SP), which tobacco will aggregate in value
to the sum of $4,900,000.00;
That the respondent, Mr. Juan Echiverri, in his capacity as President of the Ilocos
Norte Federation of Facomas, failed miserably to protect the Virginia tobacco
producers in failing to register the objections of the different members of the Ilocos
Norte Federation Facomas against the said importations of Virginia leaf tobacco;
That the Barter Permit No. BT-1380 (SP) issued by the No-Dollar Import O ce
on January 21, 1958, in favor of the Philippine Tobacco Flue-Curing and Redrying
Corporation, was issued in violation of the provisions of existing laws, particularly
Republic Acts Nos. 1194 and 1410;
That the certi cates issued by the ACCFA and/or the Bureau of Internal Revenue
were false because we have surplusage of indigenous production of Virginia type leaf
tobacco in the Philippines, which is su cient to maintain the manufacture of tobacco
production;
That the importations in question are not actually covered by any Central Bank
license whatsoever;
That as early as January, 1958, petitioners had already protested with the
Secretary of Commerce and Industry against the issuance of barter permits for such
kind of tobacco;
That the Commissioner of Customs and the Collector of Customs for Manila are
in possession, custody and control of any and all documents pertaining to the
importations made under the aforesaid Barter Permit No. BT-1380 (SP);
That the Commissioner of Customs and the Collector of Customs threaten to
release the whole or part of said shipment to the Philippine Tobacco Flue-Curing and
Redrying Corporation, some 60 hogsheads having been already released in violation of
existing laws, more specifically Republic Act Nos. 1194 and 1410.
It is prayed that the court determine —
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 1. Whether the barter permit in question is legal or valid;
2. Whether Sec. 1 of Republic Act No. 1194 in relation to Republic Act No.
1410, permits barter of Virginia leaf tobacco;
3. Whether the administrator of ACCFA can issue a certi cate under the law
in view of the actual and existing fact of surplusage in the production of Virginia leaf
tobacco; and
4. Whether the Virginia leaf tobacco so imported may be forfeited to the
government.
The respondents led their respective answers. Respondent Echeverri, on June
25, 1958, denied the charge that he failed miserably to protect the interests of tobacco
growers.
Harry Stonehill likewise denied all the material allegations of the petition, but
admitted that the barter permit was issued to the PTFRC, after favorable indorsements
were made for its issuance; that several shipments have already been made to the
company under said barter permit; and that a part of said shipments has already been
delivered to the consignee. As special defenses, he claimed that he is not the real party
in interest, the barter license having been issued to the PTFRC, of which he is only the
President, and that the amended petition is not proper because there was already a
breach of the law upon the issuance of the barter permit.
Respondent Jimenez denied all the material allegations of the petition, except the
issuance by the No-Dollar Import O ce of the barter permit and his certi cation
authorizing release of the shipment; and as special defense he alleged that the subject
matter is no justiciable for declaratory relief.
Respondent Quirino also led his answer, claiming that the barter permit was
issued by him in compliance with a Presidential Directive dated January 13, 1958.
On July 14, 1958, respondents Capapas, Angangco and Arañas led their joint
answer, denying, like their corespondents, all the material allegations of the petition. As
special defenses, they claim that the petition states no cause of action against them
individually, and that the petition is improper because there is no justiciable controversy
and there is no violation of law.
On November 19, 1958, respondents Capapas, Arañas, Quirino and Stonehill, led
a joint motion asking the court to set a preliminary hearing on the special defense that
the petition does not state a cause of action for declaratory relief, but the motion was
denied.
After the hearing and on March 12, 1959 the court rendered the decision, which is
now sought to be reviewed, thus:
"IN VIEW OF THE FOREGOING, the court nds and so holds that; (1) the
report (indorsement) Exhs. '3-Jimenez', '3-Capapas' and 'the-Intervenors', of
respondent Jimenez recommending the approval of respondent Stonehill's
request to import 10,000,000 lbs. of Virginia leaf tobacco by means of barter is
manifestly against the spirit and letter of Sec. 1 of Republic Act No. 1194
construed in relation to Sec. 6 of Republic Act 1410 and is, therefore, illegal (2)
The Barter Permit No. BT-1380 (Special), Exh. 'JJ-1' and 'JJ-2'; Exhs. '2' and '2-A',
and '4' and '4-A', issued by respondent Carlos Quirino to the Philippine Tobacco
Flue-Curing and Redrying Corporation of which respondent Stonehill is the
President must necessarily be without legal basis. (3) The home grown Virginia
leaf tobacco cannot be bartered with Virginia leaf tobacco coming from abroad
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 because the entrance of Virginia leaf tobacco to the Philippines unless there is
insu ciency of home-grown Virginia tobacco for local consumption is prohibited
by Sec. 1 of Republic Act 1194 construed in relation to Sec. 6 of Republic Act No.
1410. Therefore, the Virginia leaf tobacco imported by the Philippine Tobacco
Flue-Curing and Redrying Corporation of which respondent Stonehill is the
President from the USA by virtue of the said Barter Permit No. BT-1380 (Special)
has entered this country in agrant violation of the above-mentioned laws and,
that being the case, (4) all of the said Virginia tobacco so far imported as above
stated must be con scated in favor of the Government in accordance with Sec. 1-
e of Republic Act No. 1194.
"In view of the penal provision of Republic Act 1194, the Clerk of Court is
hereby directed to furnish the honorable Secretary of Justice with a copy of this
decision for his information."

The most important error assigned on the appeal is the ruling of the trial court
that although there has been a breach of the law, as the breach continued and could
continue up to January 21, 1960, when the barter permit would expire, the breach is not
yet complete.

The above ruling of the court is an express violation of Sec. 2 of Rule 66, which
reads as follows:
"SEC. 2. — A contract or statute may be construed before there has been a
breach thereof."

In the case of De Borja vs. Villadolid, 85 Phil., pp. 36-39 we held:

". . . We are only concerned with the question whether or not the complaint
for declaratory relief led by plaintiff and which the Court of First Instance of
Manila dismissed for lack of merit, should be given due course in this Court.
"It appears that the Director of the Bureau of Fisheries demanded that
plaintiff pay the license provided in that Act and in view of the insistent refusal of
plaintiff to comply with such demand, he nally turned over the case to the O ce
of the Fiscal of the City of Manila for appropriate action. However, plaintiff, upon
learning of the step taken by the Director of the Bureau of Fisheries, countered by
ling this complaint for declaratory relief, but this attitude of the plaintiff will only
result in multiplicity of actions which should always be avoided and the Rules of
Court obviously seeks to prevent when, in section 2 of Rule 66, it provides that the
action for declaratory relief must be brought 'before there has been a breach' of a
contract or statute the construction of which is sought.

"The facts in this case are so clear and unambiguous, that in the light of
said section 2 of Rule 66, there is nothing left for the courts to adjudicate or
construe regarding the legal rights, duties and status of appellant in the premises.
The general purpose of a declaratory judgment act is to provide for adjudication
of the legal rights, duties, or status of the respective parties." (1 C.J.S., p. 1022;
see also 16 Am. Jur., p. 284; (De Borja vs. Villadolid, 85 Phil., pp. 36-39).

Following the above-quoted decision, if an action for declaratory relief were to be

allowed in this case, after a breach of the statute, the decision of the court in the action
for declaratory relief would prejudge the action for violation of the barter law.
The institution of an action for declaratory relief after a breach of contract or
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 statute, is objectionable on various grounds, among which is that it violates the rule on
multiplicity of suits. If the case at bar were allowed for a declaratory relief, the
judgment therein notwithstanding, another action would still lie against the importer
respondent for violation of the barter law. So, instead of one case only before the
courts in which all issues would be decided, two cases will be allowed, one being the
present action for declaratory relief and a subsequent one for the con scation of the
importations as a consequence of the breach of the barter law.
The impropriety of allowing an action for declaratory relief, after a breach of the
law, can be seen in the very decision of the court itself, which is now subject of the
appeal. Whereas the case at bar was purported to bring about a simple declaration of
the rights of the parties to the action, the judgment goes further than said declaration
and decrees that the importation by the respondent corporation violates the law, and
further directs that the legal importation be con scated under the provisions of the law
(Section 1 (e), R. A. No. 1194). This con scation directed by the court lies clearly
beyond the scope and nature of an action for declaratory relief, as the judgment of
con scation goes beyond the issues expressly raised, and to that extent it is null and
void.
That the proper remedy under the circumstances was an action for injunction,
and not one for declaratory relief, is evident from the fact that the original petition was
for injunction; petitioner herein only changed the nature of the action into one for
declaratory relief when, as they explain, they found out that they did not have funds for
the writ of preliminary injunction.
As a nal reason for dismissing the present action, we have the undeniable fact
that as of this date (March, 1962) the permit had expired two years before (its life
extended to January 21, 1960 only), and all the shipments under the permit had already
been delivered to the consignee and used in the manufacture of tobacco. The petitioner
did not secure a writ of preliminary injunction, as this remedy is not proper in an action
for declaratory relief; as a result, aside from the complete violation of the barter law, the
importations have already been completely used up in the manufacture of tobacco
during the pendency of these proceedings.
Under the circumstances and at present, of what use will a declaration of the
rights of the parties under the barter law be? In fact as of the date of this decision the
issues have become moot and academic and the court can do no other than declare the
action to be so and of no practical use or value.
FOR THE FOREGOING CONSIDERATIONS, judgment appealed from is set aside
and the action for declaratory relief dismissed. Without costs.
Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera,
Paredes, Dizon and De Leon, JJ., concur.

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